Flash: Pause for thought - Societe Generale

FXstreet.com (Barcelona) - Societe Generale strategist Vincent Chaigneau believes that the last bout of Treasury selling finally has tamed the buoyant global equity market.

He notes that the exuberant Nikkei has gone into profit takin and high beta currencies are taking note. He feels that the exit may not prove as smooth as the Fed would like, making it more hesitant to move in that direction. Further he feels that such extra prudence, as well as the slowly improving US economic outlook, should save us from a sharp risk correction over the coming weeks and months. He writes, “The bullish correction in the CHF and JPY over the past week deserves attention, but we do not see the need to switch our portfolio towards a heavy anti-carry G10 bias. We see room for further correction in the EM space, however, and like to sell the HUF, RUB and THB.”